Cinemark Holdings Inc (CNK)

Based on the provided data, Cinemark Holdings Inc's liquidity ratios have fluctuated over the years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 1.47 in 2020 to 1.14 in 2021, increased to 1.26 in 2022, surged to 2.54 in 2023, and dropped significantly to 0.35 in 2024. A current ratio above 1 indicates that the company has more current assets than current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Cinemark's quick ratio declined from 1.65 in 2020 to 1.07 in 2021, rose to 1.15 in 2022, jumped to 2.46 in 2023, and then fell sharply to 0.31 in 2024. A quick ratio above 1 suggests that the company can meet its short-term obligations without relying on selling inventory.

The cash ratio, the most conservative measure of liquidity, considers only cash and cash equivalents to cover current liabilities. Cinemark's cash ratio dropped from 1.33 in 2020 to 0.92 in 2021, increased to 1.15 in 2022, soared to 2.46 in 2023, and then decreased to 0.31 in 2024. A cash ratio above 1 indicates the company can fully cover its short-term liabilities with cash.

In general, the declining trend in the liquidity ratios, especially in 2024, may raise concerns about Cinemark's ability to meet its short-term obligations. The significant drop in the ratios in 2024 warrants further investigation into the company's liquidity management and financial health.

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Additional liquidity measure

The Cash Conversion Cycle (CCC) is a financial metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Cinemark Holdings Inc's CCC has fluctuated over the years based on the available data:

- As of December 31, 2020, Cinemark had a CCC of 77.66 days, indicating that on average, it took the company approximately 77.66 days to convert its investments in inventory and other resources into cash inflows from sales.
- By December 31, 2021, the CCC decreased significantly to -20.86 days. A negative CCC suggests that the company was able to collect cash from customers before paying its suppliers or converting investments into inventory, which could be a sign of efficient working capital management or a change in the company's business model.
- The CCC increased to 35.83 days by December 31, 2022, possibly indicating a shift in the company's operating cycle or changes in inventory management practices.
- By December 31, 2023, the CCC further increased to 89.80 days, suggesting a higher average number of days required to convert investments into cash inflows.
- The CCC rose substantially to 177.07 days as of December 31, 2024, reflecting longer cycles in converting investments into cash, potentially indicating challenges in working capital management or operational efficiency.

Overall, fluctuations in Cinemark's CCC suggest varying efficiencies in managing its working capital and resource conversion processes over the examined period. Further analysis of the company's operational and financial strategies could provide insights into these changes and their implications for Cinemark's financial performance.